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5901. Composite Indexes of Leading, Coincident, and Lagging Indicators: August 2002

Publication Date:
08-2002
Content Type:
Policy Brief
Institution:
The Conference Board
Abstract:
The Conference Board announced today that the U.S. leading index decreased 0.2 percent, the coincident index increased 0.1 percent, and the lagging index decreased 0.1 percent in August.The leading index declined for the third month in a row in August. This was the first time in fifteen months that the six-month growth rate was negative.The weakness in the leading index was widespread, with a majority of the components showing declines.The coincident index continues to indicate a weak economic recovery. Industrial production declined for the first time this year and the other three components showed little improvement.
Topic:
Economics and Political Economy
Political Geography:
United States

5902. Composite Indexes of Leading, Coincident, and Lagging Indicators: July 2002

Publication Date:
07-2002
Content Type:
Policy Brief
Institution:
The Conference Board
Abstract:
The Conference Board announced today that the U.S. leading index decreased 0.4 percent, the coincident index increased 0.1 percent, and the lagging index increased 0.1 percent in July.Although the incorporated data revisions deepened the depth of the decline in the coincident index in the most recent recession, the decline of this index remains mild by historical standards. The decline from the peak of the coincident index in December 2000 to its trough in November 2001 is only 1.7 percent compared to an average decline of 3.3 percent from peak to trough in the previous six recessions.Modest gains in the coincident index in the last five months reflect the slow pace of the economic recovery. To date, the pre-recession peak of the coincident index has not yet been reached.Although the leading index declined in three of the last six months, its six-month diffusion index, which measures the proportion of the components that are rising, remains above 50 percent. This month's decline in the leading index was primarily caused by weak equity markets and lower consumer expectations.
Topic:
Economics and Political Economy
Political Geography:
United States

5903. Composite Indexes of Leading, Coincident, and Lagging Indicators: June 2002

Publication Date:
06-2002
Content Type:
Policy Brief
Institution:
The Conference Board
Abstract:
The Conference Board announced today that the U.S. leading index held steady, the coincident index increased 0.3 percent, and the lagging index decreased 0.1 percent in June.Industrial production had its biggest gain this month since October 1998. This is the most significant factor that helped push the coincident index up in June. The index posted its largest increase in a six-month span since October 2000.The coincident index appears to be gaining momentum. While the index has not surpassed the previous peak in December 2000, it has been increasing or flat since the beginning of the year. To date, the index is less than 0.3 percent away from overtaking the December 2000 peak. Moreover, the gains in the index are well diffused. The one- and six-month diffusion for the coincident index have been above 50 percent for the past four months.Stock prices and consumer expectations are the primary components that are preventing the leading index from continuing its positive trend in June. The recent wave of questionable corporate practices and the lack of measures aimed at addressing them have largely contributed to the weakness in these two components.
Topic:
Economics and Political Economy
Political Geography:
United States

5904. Composite Indexes of Leading, Coincident, and Lagging Indicators: May 2002

Publication Date:
05-2002
Content Type:
Policy Brief
Institution:
The Conference Board
Abstract:
The Conference Board announced today that the U.S. leading index increased by 0.4 percent, the coincident index increased by 0.1 percent, and the lagging index decreased by 0.2 percent in May.The big jump in real money supply and initial claims for unemployment insurance were largely responsible for the leading index picking up in May. This marks the seventh increase in the leading index in the past eight months.The decline in the coincident index in the most recent recession was relatively modest. To date, the coincident index has only increased 0.4 percent from its lowest point in November 2001 compared to an average increase of 2.4 percent in the first six months of the past six recoveries.While the coincident index has been moderately improving, the lagging index has been steeply declining. This led to the seventh increase in the last eight months in the ratio of coincident to lagging index, a series that has historically led business cycles. This reinforces the continuation of the recovery.
Topic:
Economics and Political Economy
Political Geography:
United States

5905. Composite Indexes of Leading, Coincident, and Lagging Indicators: April 2002

Publication Date:
04-2002
Content Type:
Policy Brief
Institution:
The Conference Board
Abstract:
The Conference Board announced today that the U.S. leading index decreased by 0.4 percent, the coincident index increased by 0.2 percent, and the lagging index decreased by 0.4 percent in April.Real money supply, which shrank for the second consecutive month, and falling stock prices are the primary components that caused the leading index to drop for the first time since September 2001. The overall signal from the leading index, however, remains one of moderate economic growth.Modest gains in the coincident index in the past five months indicate a slowly recuperating economy. The six-month growth rate of the coincident index underscores this economic recovery posting its biggest gain in 15 months.While improvements in current economic activity have been moderate, the cost of doing business, as represented by the lagging index, has been steeply declining. This points to continued improvement in economic conditions in the near term.
Topic:
Economics and Political Economy
Political Geography:
United States

5906. Composite Indexes of Leading, Coincident, and Lagging Indicators: March 2002

Publication Date:
03-2002
Content Type:
Policy Brief
Institution:
The Conference Board
Abstract:
The Conference Board announced today that the U.S. leading index increased by 0.1 percent, the coincident index increased by 0.2 percent, and the lagging index decreased by 0.4 percent in March The leading index has been posting strong gains, growing by 2.9 percent from September 2001 to March 2002, and by 2.2 percent for each of the six-month periods ending January and February 2002. The gains would have been more robust had it not been for the weakness in building permits and claims for unemployment insurance Gains in industrial production in the last three months, coupled with a recovery in employment, have helped push the coincident index up. Negative trends in these indicators were largely responsible for the decline in the coincident index last year. US economic recovery appears to be underway. The combination of rising energy prices, the current global instability, and the more cautious consumer and business sectors, however, might slow the pace of economic growth in the near term.
Topic:
Economics and Political Economy
Political Geography:
United States

5907. Composite Indexes of Leading, Coincident, and Lagging Indicators: February 2002

Publication Date:
02-2002
Content Type:
Policy Brief
Institution:
The Conference Board
Abstract:
The Conference Board announced today that the U.S. leading index held steady, the coincident index increased by 0.2 percent, and the lagging index decreased by 0.3 percent in February. Even with a flat month-to-month growth in February, the leading index is still up 2.4 percent from its value six months ago in August 2001 and up 3.1 percent from its value a year ago. The modest gains in the coincident index appear to be gaining momentum. Should this trend continue, the trough of the recession would most likely be November 2001, making the most recent economic contraction very short and certainly the mildest in U.S. history. The coincident-to-lagging ratio, which has historically led business cycles, is up for the fifth consecutive month in February. This is another signal that an economic recovery is underway.
Topic:
Economics and Political Economy
Political Geography:
United States

5908. Composite Indexes of Leading, Coincident, and Lagging Indicators: January 2002

Publication Date:
01-2002
Content Type:
Policy Brief
Institution:
The Conference Board
Abstract:
The Conference Board announced today that the U.S. leading index increased by 0.6 percent, the coincident index held steady, and the lagging index decreased by 0.2 percent in January. The leading index posted a robust 2.2 percent increase from July 2001 to January 2002. This is the fourth consecutive month that the six-month growth rate of the leading index has improved. Meanwhile, the six-month diffusion index, which measures the number of components that are rising, has increased above 50 percent for the first time in 21 months. With a robust leading index, the coincident index appears to be bottoming out in the past two months. The rate of decline of nonagricultural payrolls and industrial production has slowed in the last three and four months respectively while personal income and manufacturing sales have essentially held their ground throughout the recession. The coincident-to-lagging ratio, which has historically led business cycles, is up for the fourth consecutive month in January. This underscores the strength of the leading index and indicates a likely economic recovery, barring any unexpected negative events.
Topic:
Economics and Political Economy
Political Geography:
United States

5909. "Realisms at war": Robert Gilpin's political economy of hegemonic war as a critique of Waltz's neorealism

Author:
Stefano Guzzini
Publication Date:
03-2002
Content Type:
Working Paper
Institution:
Danish Institute for International Studies (DIIS)
Abstract:
There are two main ways to approach the general topic “International Political Economy and war”. One consists in adding a list of items to a definition of war already known. This usually includes a longer list of strategically important economic resources for which countries might go to conflict or they might need in a conflict. Some of this comes now often under the grandiose name of “geo-economics”. Another approach, however, would look what a different understanding of human motivation and the international system makes to our very understanding of war.
Topic:
Security, Defense Policy, Economics, International Organization, and War
Political Geography:
Europe

5910. Art, Technology and Intellectual Property

Publication Date:
02-2002
Content Type:
Working Paper
Institution:
American Assembly at Columbia University
Abstract:
At the close of their discussions, the participants in the 100th American Assembly on "Art, Technology, and Intellectual Property," at Arden House, Harriman, New York, February 7-10, 2002, reviewed as a group the following statement. While the statement represents general agreement, no one was asked to sign it. Furthermore, it should be understood that not everyone agreed with all of it, and some vigorously disagreed with some of it.
Topic:
Economics, Education, and Science and Technology
Political Geography:
United States, New York, and America

5911. Political Office, Kinship, and Household Wealth in Rural China

Author:
Andrew G. Walder and Litao Zhao
Publication Date:
12-2002
Content Type:
Working Paper
Institution:
Walter H. Shorenstein Asia-Pacific Research Center
Abstract:
For more than two decades after the demise of Maoist collectivism, a resurgent market economy has deeply transformed the social structure of rural China. By the mid-1980s, peasant households had already returned to historical marketing patterns of agricultural produce and other sidelines and services. By the turn of the century, almost 140 million individuals, or 30 percent of the rural labor force, earned regular incomes from wage labor outside agriculture. Twenty million rural households had registered individual family enterprises, and two million of them had already grown into substantial private firms. A massive rural industrial sector grew up under public ownership in the 1980s, employing more than 80 million at its height. It was then extensively privatized in the 1990s, and is now less than half its former size. While these developments have been widely noted in studies of rural industrialization and income inequality, it is still far from clear how they have altered the structure and wealth of village political and economic elites.
Topic:
Communism, Economics, and Politics
Political Geography:
China and Asia

5912. The Growth of Broadband Internet Connections in South Korea: Contributing Factors

Author:
Kyounglim Yun, Heejin Lee, and So-Hye Lim
Publication Date:
09-2002
Content Type:
Working Paper
Institution:
Walter H. Shorenstein Asia-Pacific Research Center
Abstract:
In recent years, Korea has seen a remarkable diffusion in broadband Internet connections. This paper explores the actions and factors contributing to this diffusion from three viewpoints: public sector, private sector, and social. We suggest that the matching of demand and supply is the most important factor in the fast diffusion of broadband in Korea. In particular, fierce infrastructure competition has led to quality services at a low fixed price. We also consider two challenges that lie ahead: take-up of retail e-commerce applications, and the need to bridge the digital divide.
Topic:
Economics, International Trade and Finance, and Science and Technology
Political Geography:
Asia, South Korea, and Korea

5913. Privatization and Elite Mobility: Rural China, 1979-1996

Author:
Andrew G. Walder
Publication Date:
07-2002
Content Type:
Working Paper
Institution:
Walter H. Shorenstein Asia-Pacific Research Center
Abstract:
The ideal types that motivate research on transitional economies have led to a neglect of the varied mechanisms that generate social change. One example is the implicit treatment of privatization as a single process whose initial impact will become more pronounced through time. Privatization in fact occurs via distinct mechanisms that have different consequences across types of assets and through time, as shown in an analysis of career trajectories over two decades in rural China. During the first decade, when privatization proceeded via the rapid expansion of household enterprise, ordinary individuals with nonagricultural work experience were the most likely to become private entrepreneurs. Village officials, their relatives, and public enterprise managers did not enter the private sector at rates higher than others. However, during the second decade the privatization of public enterprises began to transfer collective assets to individual ownership. During this period, public enterprise managers and the relatives of cadres emerged as the most likely to become private entrepreneurs. Private entrepreneurs, however, have yet to move into cadre posts, and cadres have yet to move into private entrepreneurship, at rates higher than others. Administrative elites have therefore proven resilient in the face of private-sector expansion, and the benefits of privatization have gradually shifted in their favor.
Topic:
Communism and Economics
Political Geography:
China and Asia

5914. Foreign Penetration of Japan's Investment-Banking Market: Will Japan Experience the "Wimbledon Effect"?

Author:
Nicole Pole
Publication Date:
07-2002
Content Type:
Working Paper
Institution:
Walter H. Shorenstein Asia-Pacific Research Center
Abstract:
Foreign banks have long faced difficulties in attempting to enter certain Japanese financial markets. This is due partly to regulatory practices and partly to specific Japanese socioeconomic conditions, for instance the system of relationship banking. While retail banking is still a sector in which almost no foreigners have been able to succeed, some foreign financial institutions have been able to gain market share in investment and wholesale banking.
Topic:
Economics and International Trade and Finance
Political Geography:
Japan, Israel, East Asia, and Asia

5915. U.S. Policy in the Andean Region

Author:
Michael Shifter
Publication Date:
11-2002
Content Type:
Working Paper
Institution:
Aspen Institute
Abstract:
Even within Latin America's generally gloomy economic and political outlook, the countries of the Andean region—Colombia, Venezuela, Peru, Ecuador and Bolivia—stand out as especially problematic and unsettled. For the United States, this set of countries, with some 120 million citizens, poses enormous policy challenges. Fostering democracy, expanding trade, combating drugs, promoting stability, and advancing social development are just some of the challenges germane to this region which, in the context of globalization, post-September 11, become even more compelling.
Topic:
Foreign Policy, Economics, and Government
Political Geography:
United States, Colombia, South America, Latin America, Venezuela, Peru, Ecuador, and Bolivia

5916. America and the Global Energy Challenge

Author:
Hal Harvey
Publication Date:
06-2002
Content Type:
Working Paper
Institution:
Aspen Institute
Abstract:
Energy is at once the lifeblood and the bane of the modern world. Fossil energy has fueled tremendous economic growth over the past 150 years. The economic history of the United States is largely the history of extracting and using coal and oil. At the same time, the profligate use of these energy sources has created the world's most pressing environmental problems, and led to major national security concerns for the United States. Energy consumption is the primary source of greenhouse gas emissions, smog, acid rain, oil spills, and nuclear waste. American dependence on oil from the Middle East forces our hand on foreign policy and imposes high economic and human costs. It is becoming increasingly clear that America's—and the world's—current diet of fossil energy is not sustainable.
Topic:
Economics, Environment, Science and Technology, and Treaties and Agreements
Political Geography:
United States, America, and Middle East

5917. How Shareholder Reforms Can Pay Foreign Policy Dividends

Author:
James J. Shinn and Peter Gourevitch
Publication Date:
06-2002
Content Type:
Working Paper
Institution:
Council on Foreign Relations
Abstract:
Corporate governance—the rules that govern the relationship between managers and shareholders—belongs on the foreign policy agenda of American decision-makers. The vigorous debates underway about corporate governance, both at home and abroad, present an opportunity for the United States to advance its foreign policy goals of enhancing free trade and financial stability.
Topic:
Foreign Policy, Economics, Government, Industrial Policy, and International Trade and Finance
Political Geography:
United States

5918. Monetary Policy Rules and the International Monetary Transmission

Author:
Leonor Coutinho
Publication Date:
10-2002
Content Type:
Working Paper
Institution:
Centre for European Policy Studies (CEPS)
Abstract:
This paper analyses alternative monetary policy rules for the ECB, using a two "country" model of the euro area and the US, that assumes monopolistic competition, sticky prices and optimizing agents. The alternative rules analyzed for the ECB are ranked by their ability to stabilize consumption, output, and inflation and maximize consumers' welfare. The analysis contributes toward understanding the trade-offs faced by policymakers in open economies and provides some support for the current design of the ECB's operational framework. The results suggest that stabilizing money-growth, in addition to inflation, gives an additional degree of freedom to stabilize output. Although price stability is likely to remain the primary objective of the ECB, monetary policy must "without prejudice of price stability (...) support the general economic policies in the Community..." (Article 2). Hence monitoring money, under certain assumptions about the shocks hitting the economy, may deliver a better outcome in terms of output stabilization which should allow the ECB to fulfill its secondary but nonetheless important commitment.
Topic:
Economics, Government, and International Trade and Finance
Political Geography:
United States

5919. Estimating the Effects of Fiscal Policy in OECD Countries

Author:
Roberto Perotti
Publication Date:
10-2002
Content Type:
Working Paper
Institution:
Centre for European Policy Studies (CEPS)
Abstract:
This paper studies the effects of fiscal policy on GDP, prices and interest rates in 5 OECD countries, using a structural Vector Autoregression approach. Its main results can be summarized as follows:1 ) The estimated effects of fiscal policy on GDP tend to be small: positive government spending multipliers larger than 1 tend to be the exception; 2) The effects of fiscal policy on GDP and its components have become substantially weaker over time; 3) Under plausible values of the price elasticity, government spending has positive effects on the price level, although usually small; 4) Government spending shocks have significant effects on the nominal and real short interest rate, but of varying signs; 5) In the post-1980 period, net tax shocks have positive short run effects on the nominal interest rate, and typically negative or zero effects on prices; 6) The US is an outlier in many dimensions; responses to fiscal shocks estimated on US data are often not representative of the average OECD country included in this sample.
Topic:
Economics and Government
Political Geography:
United States and Europe

5920. Improving the Governance of European Foreign Aid: Development Co-Operation as an Element of Foreign Policy

Author:
Carlos Santiso
Publication Date:
10-2002
Content Type:
Working Paper
Institution:
Centre for European Policy Studies (CEPS)
Abstract:
Should European Union (EU) member states 're-nationalise' foreign aid? Considering the dismal record of the aid managed by the European Commission, this is a legitimate question that European leaders nevertheless seem unwilling to address seriously. Like in America, there is heightened debate across Europe on the purpose of the aid it provides to developing countries. The current debates on poverty reduction, debt relief and, more broadly, the effectiveness of development assistance have brought renewed light on foreign aid.
Topic:
Foreign Policy, Development, and Economics
Political Geography:
America and Europe

5921. The Economic Impact of Enlargement on the European Economy: Problems and Perspectives

Author:
Paul Brenton
Publication Date:
10-2002
Content Type:
Working Paper
Institution:
Centre for European Policy Studies (CEPS)
Abstract:
Much of the attention on the economic aspects of the forthcoming enlargement of the EU have concentrated upon the high-profile issues which are linked to the level of relative economic development in the acceding countries; the perceived threat of large-scale migration and the budgetary costs arising from implementation of EU agricultural and regional policies. This paper briefly discusses that these are not insurmountable problems and stresses that the main difficulties from the next enlargement may arise from the effective inclusion of the acceding countries into the Single Market, the microeconomic hub of the EU. We discuss that the process of regulatory harmonisation will become more difficult in an EU of 25 or more members, which entails greater emphasis on the principle of mutual recognition as the main tool for ensuring freedom of movement of goods and services. However, mutual recognition has its limits and is likely to be less effective the more diverse the countries involved.
Topic:
Economics and International Trade and Finance
Political Geography:
Europe

5922. Outsourcing and Inequality

Author:
Paul Brenton, Bob Anderton, and Eva Oscarsson
Publication Date:
10-2002
Content Type:
Working Paper
Institution:
Centre for European Policy Studies (CEPS)
Abstract:
This paper brings together and analyses the results of empirical analyses which, in contrast to most other studies, find that trade has been a significant cause of labour market inequality in various industrialised countries. The approach is based upon the concept of outsourcing – whereby the low-skill parts of the production chain are 'outsourced' to low-wage countries. A distinguishing feature of the empirical work is the use of highly detailed trade data, which allow imports from high- and low-wage countries to be separately identified at the industry level. Using cost minimisation framework, we show that imports from low-wage countries have made a significant contribution to the decline in the wage-bill share and/or relative employment of less-skilled workers in the UK, the USA, Sweden and Italy. We also show how the country-specific characteristics of outsourcing can lead to quite different inequality outcomes in different countries. In line with other studies, we also find that technology has played an important role in causing the increase in inequality in many countries. However, there is also some evidence that some of the rapid increase in the application of new technologies in recent decades has been trade-induced through mechanisms such as 'defensive innovation'.
Topic:
Economics, Industrial Policy, International Trade and Finance, and Science and Technology
Political Geography:
United States and United Kingdom

5923. Who Needs Foreign Banks?

Author:
Daniel Gros
Publication Date:
09-2002
Content Type:
Working Paper
Institution:
Centre for European Policy Studies (CEPS)
Abstract:
This paper shows that countries with weak banking system and fiscal institutions, might benefit from the presence of foreign banks, which can constitute a commitment and transparency device. Foreign banks can also reduce the probability of self-fulfilling speculative attacks. A strong presence of foreign banks can make a currency peg feasible in the first place by rendering it more resistant to speculative attacks. The European experience is instructive in this respect. In all of the candidate countries from Central and Eastern Europe (CEEC) the banking system is now dominated by foreign banks. This is now taken for granted, but it is unusual if one looks at the existing EU-15 members, where foreign banks play a marginal role in even the smallest economies.
Topic:
Economics and International Trade and Finance
Political Geography:
Europe

5924. Interdependent Growth in the EU: The Role of Trade

Author:
María Garcia-Vega and José A. Herce
Publication Date:
08-2002
Content Type:
Working Paper
Institution:
Centre for European Policy Studies (CEPS)
Abstract:
After properly modelling growth externalities and using spatial econometric techniques we investigate whether economic integration promotes interdependent growth among countries. We conclude that this has been indeed the case for advanced OECD countries and that, for those countries belonging to the EU, through successive enlargements, the effect has been even stronger. More precisely, if every (trade) partner of a given country experiences an extra growth of 1 percentage point, this economy will profit from an extra 0.5 point, and if this country belongs to the EU it will have an additional increase of its rate of growth of 0.2 points. Both figures can be interpreted as growth externalities with the latter suggesting that an integration process like the one followed by the EU has an (positive) effect on growth.
Topic:
Economics and International Trade and Finance
Political Geography:
Europe

5925. Making EU Trade Agreements Work: The Role of Rules of Origin

Author:
Paul Brenton and Miriam Manchin
Publication Date:
03-2002
Content Type:
Working Paper
Institution:
Centre for European Policy Studies (CEPS)
Abstract:
A key element of the EU's free trade and preferential trade agreements is the extent to which they deliver improved market access and so contribute to the EUs foreign policy objectives towards developing countries and neighbouring countries in Europe, including the countries of the Balkans. Previous preferential trade schemes have been ineffective in delivering improved access to the EU market. The main reason for this is probably the very restrictive rules of origin that the EU imposes, coupled with the costs of proving consistency with these rules. If the EU wants the 'Everything but Arms' agreement and free trade agreements with countries in the Balkans to generate substantial improvements in access to the EU market for products from these countries then it will have to reconsider the current rules of origin and implement less restrictive rules backed upon by a careful safeguards policy.
Topic:
Foreign Policy, Economics, Government, Human Rights, International Trade and Finance, Migration, and Political Economy
Political Geography:
Europe and Balkans

5926. The Development of European Citizenship and its Relevance to the Integration of Refugees

Author:
Joanna Apap
Publication Date:
01-2002
Content Type:
Working Paper
Institution:
Centre for European Policy Studies (CEPS)
Abstract:
Achieving an integrated Europe involves political and social unity as much as economic integration. Thus, the issue of European citizenship is central to the debate about European integration. Union citizenship needs to be distinguished from national citizen ship. Every citizen of the Union enjoys a first circle of nationality rights within a member state and a second circle of new rights enjoyed in any member state of the EU. The presence of immigrants in Europe also raises wider questions for government policy in the field of citizenship. There are various issues that arise in the European context with respect to the boundaries of citizenship. One of the main questions in this regard is the extent to which the division between European Union citizens and third country nationals will continue to prevail.
Topic:
Economics, Government, Human Rights, International Trade and Finance, Migration, and Political Economy
Political Geography:
Europe

5927. Consumer Credit Rates in the Eurozone: Evidence on the Emergence of a Single Retail Banking Market

Author:
Stefanie Kleimeier and Harald Sander
Publication Date:
01-2002
Content Type:
Working Paper
Institution:
Centre for European Policy Studies (CEPS)
Abstract:
This study provides new evidence on the emergence of a single eurozone retail banking market with particular reference to consumer credit. Given the heterogeneous nature of consumer credit products in the eurozone, the authors reject the earlier proposition of the Cecchini study, which equates banking market integration with identical interest rates throughout the eurozone. The present study advocates the use of the co-integration methodology, which allows us to investigate integration in the presence of country-specific credit rates. The empirical results indicate only very limited evidence of an integrated retail banking market prior to 1 January 1999, pointing to the limited effectiveness of the single market cum Second Banking Directive in particular in integrating consumer credit markets.
Topic:
Economics and Political Economy
Political Geography:
Europe

5928. Iran: The Struggle for the Revolution's Soul

Publication Date:
08-2002
Content Type:
Working Paper
Institution:
International Crisis Group
Abstract:
Iran is at a crossroads. More than two decades after the revolution that swept Supreme Leader Ayatollah Ruhollah Khomeini into power, its people and leaders are deeply torn about the country's future. The outcome of the struggle for the revolution's soul will resonate across the Middle East and have major implications both strategically and for ongoing efforts to curb violence, including terrorism, in the region. The internal struggle is fluid and unstable. While the notion of a clear-cut battle pitting conservatives against reformers is appealing, it does not do justice to the reality. There are divisions within both camps and connections between them; indeed, some actors may be “conservative” on certain issues and “reformers” on others. Likewise, the idea that Iran's rulers can be dismissed en bloc as obstacles to reform overlooks the genuine differences that exist regarding the proper role of religion, democracy, social norms, economics and foreign policy. The complexity of Iran's domestic situation makes it all the more difficult – but also imperative – for the international community to exercise caution, properly fine-tune its actions and anticipate their impact.
Topic:
Security, Economics, Human Rights, and Politics
Political Geography:
Iran, Middle East, and Arab Countries

5929. Global Economic Prospects

Author:
Michael Mussa
Publication Date:
09-2002
Content Type:
Policy Brief
Institution:
Peterson Institute for International Economics
Abstract:
The global economic recovery is continuing but at a somewhat slower pace than was anticipated six months ago. Specifically, using the country weights from the IMF's World Economic Outlook, the forecast for real GDP growth in the world economy during 2002 (i.e., on a fourth-quarter-to-fourth-quarter basis) is cut by about half a percentage point to 3 percent—a pace that is slightly below my estimate of the potential growth rate for world GDP. This downward revision reflects primarily slower growth than earlier expected during the first half of 2002 in most industrial countries and the expectation that growth will remain somewhat more sluggish than earlier expected at least through year-end. For 2003, the forecast for global economic growth is also cut by about half a percentage point—to 4 percent—reflecting both general factors suggesting slightly weaker performance in many industrial and developing countries and the particular economic risks arising from possible military action against Iraq and from potential credit events affecting key developing countries. Despite these downward revisions, however, there is little doubt that the world economy will see significant improvement this year from the 1 percent growth recorded in 2001, and it is still reasonable to expect further improvement to a growth rate modestly above global potential during 2003.
Topic:
Economics
Political Geography:
United States, Iraq, Europe, Israel, Asia, South America, Latin America, and North America

5930. The Foreign Sales Corporation: Reaching the Last Act?

Author:
Gary Hufbauer
Publication Date:
11-2002
Content Type:
Policy Brief
Institution:
Peterson Institute for International Economics
Abstract:
Some trade disputes—like long Russian novels—never seem to end. The United States, Europe, and other trading nations have disputed the taxation of export earnings since the 1970s. To understand why the Foreign Sales Corporation (FSC) dispute is so hard to resolve, we must start with a historical tour.
Topic:
Economics and Political Economy
Political Geography:
Russia, United States, and Europe

5931. Further Financial Services Liberalization in the Doha Round?

Author:
Wendy Dobson
Publication Date:
08-2002
Content Type:
Policy Brief
Institution:
Peterson Institute for International Economics
Abstract:
Recent evidence demonstrates strong links between developing countries' long-term growth and financial reform. Deputy Treasury Secretary Kenneth Dam has suggested that developing countries can transform their domestic financial sectors into "engines of growth."
Topic:
Economics, Emerging Markets, International Organization, and International Trade and Finance

5932. Is Brazil Next?

Author:
John Williamson
Publication Date:
08-2002
Content Type:
Policy Brief
Institution:
Peterson Institute for International Economics
Abstract:
This policy brief examines whether the pessimism that recently gripped the financial markets about Brazil's economic prospects is justified, and whether the big IMF program in support of Brazil announced on August 8, 2002, is likely to succeed in turning the tide. It concludes that present policies would be adequate to secure a gradual reduction in the debt/GDP ratio given return of the exchange rate to a less undervalued level and a level of interest rates that is normal by past Brazilian standards though still high by world standards, though not under the recent conditions of a severely undervalued real and astronomical interest rates. It also concludes that the strongly improving trend recently evident in Brazilian trade promises a progressive reduction in external vulnerability, though this again could be jeopardized by the maintenance of sky-high interest rates. It then argues that, despite the mixed records of the two principal opposition candidates for the presidency, neither would be likely to choose a policy of deliberately reneging on Brazil's debts. That being so, the recent market turbulence has to be interpreted as a panic in which even those convinced that Brazil's fundamentals are sound did not dare to speculate in favor of restoration of normality. Such situations are exactly those where the IMF can play a useful role in breaking a panic, and hence the new loan much improves the chances of Brazil avoiding the implosion that would be likely to follow a debt restructuring.
Topic:
Economics and International Trade and Finance
Political Geography:
Brazil and South America

5933. The Looming Japanese Crisis

Author:
Adam S. Posen
Publication Date:
05-2002
Content Type:
Policy Brief
Institution:
Peterson Institute for International Economics
Abstract:
After more than a decade of economic stagnation and minimal structural change, Japan stands on the brink of outright financial crisis—the only debate is whether the Japanese government can dodge its imminent economic threats for another six months at most, or ride the wave of global expansion to throw still more money at these problems with decreasing effectiveness until the public debt becomes unsustainable (which should be no later than 2005). Either way, volatility in Japanese asset markets will be extremely high for the next 36 months, with significant declines on average in asset prices and the yen.
Topic:
Economics, Government, and International Trade and Finance
Political Geography:
Japan, Israel, and East Asia

5934. Support the Ex-Im Bank: It Has Work to Do!

Author:
Gary Clyde Hufbauer and Ben Goodrich
Publication Date:
05-2002
Content Type:
Policy Brief
Institution:
Peterson Institute for International Economics
Abstract:
The US Export-Import (Ex-Im) Bank is again at the center of controversy, as Congress debates the terms for its charter renewal. This policy brief critiques provisions of the House and Senate versions of the reauthorization bill and summarizes three justifications for Congress giving adequate support to the Ex-Im Bank. Box 1 provides a capsule description of the Ex-Im Bank's operations.
Topic:
Economics, Government, and International Trade and Finance
Political Geography:
United States

5935. Sovereign Debt Restructuring: New Articles, New Contracts – or No Change?

Author:
Marcus Miller
Publication Date:
04-2002
Content Type:
Policy Brief
Institution:
Peterson Institute for International Economics
Abstract:
It was at the National Economists' Club in November 2001 that Anne Krueger, first deputy managing director of the International Monetary Fund, threw down the gauntlet. “There is,” she said, “a gaping hole [in the international financial architecture] – we lack incentives to help countries with unsustainable debts resolve them promptly and in an orderly way. At present the only available mechanism requires the international community to bail out the private creditors. It is high time this hole was filled.”
Topic:
Economics, Government, and International Trade and Finance

5936. Economic Issues Raised by Treatment of Takings Under NAFTA Chapter 11

Author:
Edward M. Graham
Publication Date:
11-2002
Content Type:
Working Paper
Institution:
Peterson Institute for International Economics
Abstract:
This working paper examines, from an economic perspective, the treatment of takings (property rights) under NAFTA Chapter 11. To be more precise, the paper examines the treatment of takings as environmental groups fear might be established as the result of investor dispute settlement under this chapter; as of the date of this writing, most of the cases that have the potential to be precedent-setting have not been finally decided, albeit one—the Metalclad case—has been decided in a way that is unsettling to environmentalists. The author attempts to determine whether requiring public compensation of private investors for diminishment of value resulting from government regulatory action has the potential of achieving anything close to an “optimal” outcome from a societal cost-benefit point of view (defined below). This determination makes use of tools of economic analysis and, in particular, Coase's theorem regarding achieving optimal outcomes where negative externalities are present. The overall conclusion is that, although Coase's theorem can be invoked to argue that such an outcome can be achieved either via a “polluter pays” approach or a “public pays” (or “public must compensate”) approach, as a matter of practical application, the first approach is preferable to the second for a number of reasons, including government “fiscal illusion” and “moral hazard.”
Topic:
Economics and International Organization
Political Geography:
United States, Latin America, and North America

5937. Assessing Globalization's Critics: "Talkers Are No Good Doers???"

Author:
Kimberly Ann Elliott, Debayani Kar, and J. David Richardson
Publication Date:
09-2002
Content Type:
Working Paper
Institution:
Peterson Institute for International Economics
Abstract:
This paper is about the critics of the “doers” of globalization. It describes who they are, where they came from, what they want, how economists, policymakers, and others might understand them better, and where globalization might head from here. Many critics are themselves strongly internationalist and want to see globalization proceed, but under different rules. Some, particularly the protesters in the streets, focus mainly on what is wrong with the world. But some of them put forward broad alternative visions and others offer detailed recommendations for alleviating the problems they see arising from status quo globalization. Most of them have roots in long-standing transnational advocacy efforts to protect human rights and the environment and reduce poverty around the world. What brings them together today is their shared concern that the process by which globalization's rules are being written and implemented is undermining democracy and failing to spread the benefits broadly. This paper sketches the key issues and concerns that motivate the critics in a way that is broadly representative and intelligible to economists. It finds more resonance for the critics' agenda in economics than they commonly recognize. And it attempts to capture the concerns of Southern as well as Northern critics and to analyze the issues that divide as well as bring them together. Finally, it evaluates those issues and alternative proposals on which even globalization enthusiasts and the critics might come together cooperatively.
Topic:
Economics, Globalization, and International Trade and Finance

5938. Toward A Sustainable FTAA: Does Latin America Meet The Necessary Financial Preconditions?

Author:
Liliana Rojas-Suarez
Publication Date:
07-2002
Content Type:
Working Paper
Institution:
Peterson Institute for International Economics
Abstract:
This paper focuses on identifying preconditions that will ensure the sustainability of a Free Trade Area of the Americas (FTAA). It argues that the macro, micro, and political conditions advanced in the literature to measure a country's ability to compete internationally, while necessary, are not sufficient to ensure the success and permanence of a free trade agreement. Instead, two additional financial conditions are needed. The first is that each partner in the free trade area needs to have sustainable public debts as determined by the achievement of credible and sustainable structural fiscal balances. The second is that exchange rate regimes across trading partners should be compatible in the sense that adverse shocks in one country do not generate a policy dilemma in other partners between abandoning their exchange rate system or the free trade area.
Topic:
Economics and International Trade and Finance
Political Geography:
South America, Latin America, Central America, and Caribbean

5939. Home Bias, Transactions Costs, And Prospects For The Euro: A More Detailed Analysis

Author:
Catherine L. Mann and Ellen E. Meade
Publication Date:
07-2002
Content Type:
Working Paper
Institution:
Peterson Institute for International Economics
Abstract:
This paper brings together the literature on determination of home bias in equity holdings and the portfolio balance model of exchange rates to consider whether the dollar might be affected by a change in transactions costs that alters international portfolio allocations. Our empirical findings lend support to the view that transactions costs have a significant influence on US portfolio holdings, even after accounting for float market share. In addition, new survey evidence on the equity holdings of European firms indicates home bias for European investors, and points to a reduction in the magnitude of this home bias since 1997.
Topic:
Economics and International Trade and Finance
Political Geography:
United States and Europe

5940. Six Practical Views of Central Bank Transparency

Author:
Adam S. Posen
Publication Date:
05-2002
Content Type:
Working Paper
Institution:
Peterson Institute for International Economics
Abstract:
In the span of fifteen years, central bank transparency has gone from being highly controversial to motherhood and apple pie (one can insert analogous certitudes by country here). It is now an accepted broad goal to which all central banks pay at least lip service. Yet, like many other broad concepts in economic policy, such as “fiscal discipline” or “price stability,” what central bank transparency actually means remains rather open to debate. With the widespread adoption of inflation targeting, seen usually as an expression of increased central bank transparency, it is worthwhile to try to apply some clarity and rigor to this central banking concept du jour.
Topic:
Economics, Government, and International Trade and Finance

5941. Passive Savers and Fiscal Policy Effectiveness in Japan

Author:
Adam S. Posen and Kenneth N. Kuttner
Publication Date:
04-2002
Content Type:
Working Paper
Institution:
Peterson Institute for International Economics
Abstract:
The efficacy of fiscal policy in Japan in the last decade has been a subject of considerable dispute, and the coincidence of mounting deficits and continued stagnation has led some to conclude that fiscal policy was ineffective. This paper finds ample support for the opposite conclusion: exogenous fiscal policy shocks (as derived from a structural vector-autoregression model) had pronounced real effects in Japan. Expansionary fiscal policy was expansionary, and contractionary policy contractionary, consistent with the implications of conventional macroeconomic theory. A historical decomposition shows that Japan's burgeoning public debt stems almost entirely from the recession-caused slowdown in revenue growth, and that fiscal policy was at times procyclical rather than consistently expansionary. Direct examination of the long-run relationship between private saving, taxes, and spending confirms that any Ricardian effects of future public liabilities on saving were insufficient to offset the direct first-order effects of taxes and public expenditures. The passivity of Japanese savers therefore seems to have contributed to the efficacy of fiscal policy; otherwise, some combination of increased saving, capital outflow, and higher interest rates would have diminished its impact.
Topic:
Economics, International Trade and Finance, and Political Economy
Political Geography:
Japan, Israel, and East Asia

5942. Moral Hazard and the U.S. Stock Market: Analyzing the “Greenspan Put”?

Author:
Marcus Miller, Paul Weller, and Lei Zhang
Publication Date:
01-2002
Content Type:
Working Paper
Institution:
Peterson Institute for International Economics
Abstract:
When the risk premium in the US stock market fell far below its historic level, Shiller (2000) attributed this to a bubble driven by psychological factors. As an alternative explanation, we point out that the observed risk premium may be reduced by one-sided intervention policy on the part of the Federal Reserve, which leads investors into the erroneous belief that they are insured against downside risk. By allowing for partial credibility and state dependent risk aversion, we show that this 'insurance'—referred to as the Greenspan put—is consistent with the observation that implied volatility rises as the market falls. Our bubble, like Shiller's, involves market psychology, but what we describe is not so much 'irrational exuberance' as exaggerated faith in the stabilizing power of Mr. Greenspan.
Topic:
Economics, Government, International Trade and Finance, and Political Economy
Political Geography:
United States

5943. Europeanization and the Retreat of the State

Author:
Volker Schneider and Frank M. Häge
Publication Date:
03-2002
Content Type:
Working Paper
Institution:
Minda de Gunzburg Center for European Studies, Harvard University
Abstract:
Is the state on the retreat? We examine this question through an analysis of changing patterns of government involvement in infrastructure provision, which is generally considered to be one of the primary functions of the modern state. Based on an analysis of the extent of privatization of infrastructure companies between 1970 and 2000 across twenty-six OECD countries, we find that there is indeed a general trend towards less public infrastructure provision visible in all of the countries and that the main factors associated with the extent of privatizations are EU membership and government ideology. We argue that the trend of privatizing infrastructure companies was triggered by a change of the prominent economic discourse in the 1970s and that a rightist party ideology and EU membership fostered the adoption and implementation of these ideas in domestic settings.
Topic:
Development, Economics, and Government
Political Geography:
Europe

5944. Spain in the EU: fifteen years may not be enough

Author:
Miguel Sebastian
Publication Date:
11-2002
Content Type:
Working Paper
Institution:
Minda de Gunzburg Center for European Studies, Harvard University
Abstract:
Europe has been the driving force of economic policy in Spain over the last four decades and the key factor behind the modernization and globalisation of the Spanish Economy. The accession to the EEC in 1986 was a crucial step in the process of economic and political integration.
Topic:
Economics and International Trade and Finance
Political Geography:
Europe

5945. Temporary work agencies and equilibrium unemployment

Author:
Michael Neugart and Donald Storrie
Publication Date:
10-2002
Content Type:
Working Paper
Institution:
Minda de Gunzburg Center for European Studies, Harvard University
Abstract:
A striking feature of OECD labor markets in the 1990s has been the very rapid increase of temporary agency work. We augment the equilibrium unemployment model as developed by Pissarides and Mortensen with temporary work agencies in order to focus on their role as matching intermediaries and to examine the aggregate impact on employment. Our model implies that the improvement in the matching efficiency of agencies led to the emergence and growth of temporary agency work. We also show that temporary agency work does not necessarily crowd out other jobs.
Topic:
Development, Economics, and Politics
Political Geography:
Europe

5946. Building the Dual Earner/Dual Carer Society: Policy Developments in Europe

Author:
Marcia Meyers and Janet Gornick
Publication Date:
10-2002
Content Type:
Working Paper
Institution:
Minda de Gunzburg Center for European Studies, Harvard University
Abstract:
A new model of work and family life is emerging out of contemporary debates on social citizenship and the characteristics of the “woman-friendly” welfare state. The dual-earner/ dual-carer model refers to a social and economic arrangement in which men and women engage symmetrically in both paid work in the labor market and in unpaid work in the home. Parents' ability to balance family and market responsibilities, and to allocate employment and childcare-giving equally between mothers and fathers, could be facilitated by a package of state policies. Three areas of supportive policy – all invarious states of development across Europe – include: (1) family leave schemes that provide job protections and wage replacement for parents of young children; (2) affordable, high quality early childhood education and care, to a limited extent for very young children and to a much larger extent for children aged three to school-age; and (3) labor market regulations aimed at shortening the standard work week and strengthening re-muneration for reduced-hour employment. In this paper, we review European policy provisions, and then turn our attention to the United States case. We suggest that embracing the vision of the dual-earner/ dual-carer society may help to draw diverse but unified support for family policy development in the United States.
Topic:
Economics, Government, and Human Welfare
Political Geography:
United States and Europe

5947. Three Worlds of Working Time: Policy and Politics in Work-time Patterns of Industrialized Countries

Author:
Brian Burgoon and Phineas Baxandall
Publication Date:
09-2002
Content Type:
Working Paper
Institution:
Minda de Gunzburg Center for European Studies, Harvard University
Abstract:
Given the underdeveloped attention to political and policy origins of aggregate work time patterns in the work-time literature, and the lack of any significant attention to work-time in the broader comparative political economy literature, this paper has pursues a broad mandate: to bring more politics into the study of work-time, and work-time into the study of politics. Using data allowing better comparison among OECD countries, we argue that study of working time needs to consider annual hours per employee and per working-age person, shaped by a range of social as well as direct work-time policies. We also argue that union interest in work-time reduction is more ambiguous than customarily supposed, with union interests likely mediated by a range of other conditions, especially female labor market participation and female union membership. Finally, we argue that attention to party systems and policy clusters should begin with consideration of Social Democratic, Liberal and Christian Democratic worlds of work time. We support these arguments with cross-section time-series study of 18 OECD countries, and brief qualitative studies of work-time in Finland, the United States, and the Netherlands.
Topic:
Economics and Industrial Policy
Political Geography:
United States, Europe, and Netherlands

5948. Economic Policy Coordination in EMU: Institutional and Political Requirements

Author:
Stefan Collignon
Publication Date:
05-2002
Content Type:
Working Paper
Institution:
Minda de Gunzburg Center for European Studies, Harvard University
Abstract:
This paper looks at the macroeconomic performance of EMU since it started in 1999. It argues that Euroland has benefited from a benign environment, appropriate monetary policy and structural reforms. However, there is no institution clearly in charge of formulating coherent economic policies in Euroland and this is reflected in the euro's external value. The paper then evaluates the need for policy coordination, distinguishing between weak and strong forms of coordination failure. It shows that intergovernmental coordination may be an answer to the latter, pareto-improving multiple equilibria. However, overcoming weak coordination failure requires further policy delegation to the EU-level, particularly for the definition of an aggregate fiscal policy stance. Yet, this is only possible if the democratic deficit resulting from intergovernmental cooperation is closed by a European-wide policy consensus. To achieve this should be the objective of a European constitution.
Topic:
Economics, Government, and International Cooperation
Political Geography:
Europe

5949. European Monetary Union: between the stakeholder and the stockholder models of capitalism

Author:
Carlos A. Rozo
Publication Date:
05-2002
Content Type:
Working Paper
Institution:
Minda de Gunzburg Center for European Studies, Harvard University
Abstract:
From the mid-1980s on a new attitude towards self-determination appeared in Western European integration. With the Maastricht Treaty of 1992 and, later, with the Amsterdam Treaty of 1997 the member countries of the European Community manifested their determination to be active players in the new international order. Accepting and instituting the single market and monetary union constituted, however, a challenge of compatibility between the traditional model of welfare European capitalism and the impositions coming from globalization under the neo-liberal model of Anglo-Saxon capitalism. This issue is examined here under two perspectives. The first reviews the implications which globalization has had on the European model of capitalism and the second the complications for monetary management as Europe moves from a nationally regulated to a union regulated financial structure.
Topic:
International Relations, Economics, and Treaties and Agreements
Political Geography:
Europe

5950. The Measure of India: What Makes Greatness?

Author:
Joydeep Mukherji
Publication Date:
11-2002
Content Type:
Working Paper
Institution:
Center for the Advanced Study of India
Abstract:
I join you tonight to consider India on the scales of greatness. In other words, to ask: by what standards do people regard a state as great? And how does India conform to those standards? I must say at the outset, that these are not questions on which I personally would fixate. Greatness in terms of power is not a standard that moves me as a human being. My impulse when looking at countries is to say, “what's so great about being great?” I think a country's taxi drivers tell us more about it than the number of nuclear bombs it might possess. The number of Ph.D. holders, engineers, and writers driving taxicabs in a country, and where they came from, tells me a lot about the country we're in and the country from whence they came. The taxi driver in Iran who complains bitterly about the ayatollahs and wants to talk about pop music and freedom, tells me something about Iran. The engineer who fled Nigeria for the opportunity possible in America, even if it's driving a cab, tells me something about Nigeria and the U.S. Great power has little to do with it.
Topic:
Economics and Industrial Policy
Political Geography:
America, Iran, South Asia, India, and Nigeria